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FG Close to Appointing Banks For Eurobond Sale

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  • FG Close to Appointing Banks For Eurobond Sale

The Federal Government is close to appointing banks to help underwrite the country’s first international bond since 2013 as the government deals with the worst fiscal crisis in 25 years.

Standard Chartered, Citi and Stanbic IBTC have been in talks with officials to arrange the Eurobond sale, according to sources close to the deal.

Vice-President Yemi Osinbajo has last week said the government hoped to conclude the sale of a $1bn Eurobond by the end of the first quarter of 2017.

The recent rise in global crude oil prices, coupled with expectations that Nigeria was making progress with plans to arrange loans from bilateral and multilateral lenders such as the World Bank, is expected to strengthen the country’s position in global capital markets after years in the cold.

The Financial Times reported that a successful debt sale would mark the end of a year of repeated setbacks for Nigeria, adding that prices for existing debt had fallen sharply as investors had shied away from the country, unsettled by militant attacks in the Niger Delta.

Efforts by the country to tap the bond market earlier this year had been frustrated by volatile oil prices, currency weakness after the peg was abandoned in June and the government’s failure to implement further reforms demanded by the international community.

The Head of Research at Ashmore Investment Management, Jan Dehn, said that even after the government abandoned its currency peg, there was a perception among investors that the naira could weaken further — leaving them reluctant to lend the country “hard” currencies such as dollars.

“People did not trust the currency,” he said. “It’s a difficult process for the country. [President Muhammadu] Buhari inherited a lot of problems including the difficulties with Boko Haram, the economy and the falling oil price.”

In spite of the removal of the currency peg, the official exchange rate remains far higher than the rate at which the currency changes hands in the black market.

Nigerian bankers and economists say the central bank is still managing the currency instead of allowing it to float freely.

But Kevin Daly, portfolio manager on the emerging market fixed-income team at Aberdeen Asset Management, says the rise in oil prices and move towards reform means there was scope for the country to tap debt markets. “Nigeria has very little external debt,” he added.

Nigeria first issued international debt in January 2011, tapping markets once again in mid 2013 to raise $1bn of five- and 10-year debt.

The yield on Nigeria’s bond due in 2023 jumped from 6.6 per cent almost 10 per cent earlier this year. It was said to be trading at 7.8 per cent.

Oil production in the country has fallen sharply as attacks on energy infrastructure curtailed supplies and compounded the effects of the price of its main export falling dramatically early in 2016.

The vandalism and production challenges meant that the country was granted an exception to the recent OPEC agreement to cut output for the first time since the global financial crisis, the report stated.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Federal Government Clears $120m Debt to Gas Companies Amid Nigeria’s Power Crisis

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Gas-Pipeline

Amidst Nigeria’s persistent power crisis, the Federal Government has taken a pivotal step forward by clearing a significant portion of its debt to gas companies.

A sum of $120 million has been paid out of the country’s $1.3 billion indebtedness to gas suppliers, offering a glimmer of hope for improved energy stability across the nation.

The Minister of Power, Chief Adebayo Adelabu, underscored the critical role of gas in power generation and highlighted how the mounting debts had severely hampered gas supply to electricity-generating companies, exacerbating the country’s electricity shortfall.

Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity needs, making the timely settlement of gas debts paramount for enhancing power generation capacity and addressing the nation’s energy deficit.

Addressing delegates at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed optimism about the government’s progress in offsetting its financial obligations to gas producers.

He emphasized the importance of aligning gas and power sectors to foster sustainable energy solutions.

As Nigeria grapples with the multifaceted challenges plaguing its energy landscape, the government’s commitment to settling outstanding gas debts marks a pivotal stride towards revitalizing the country’s power infrastructure and ensuring reliable electricity access for its citizens.

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Finance

Nigeria Insurance Corporation Reimburses Depositors of 179 Closed Microfinance and Four Mortgage Banks

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The Nigeria Insurance Corporation (NDIC) has announced the successful reimbursement of depositors affected by the closure of 179 microfinance banks and four mortgage banks across the country.

The reassuring news came during the 45th Kaduna International Trade Fair, where NDIC’s Managing Director, Dr. Bello Hassan, explained the corporation’s unwavering commitment to safeguarding depositors’ funds amidst financial uncertainties.

Dr. Hassan, represented by Hauwa Gambo, the NDIC’s Deputy Director of Communication, highlighted the corporation’s proactive measures in protecting the interests of depositors.

The introduction of the Single Customer View framework has expedited the process of reimbursing depositors of liquidated banks, ensuring swift and transparent transactions.

The corporation’s collaboration with the judiciary has yielded positive results, facilitating the speedy prosecution of failed insured banks and resolving long-standing cases of bank liquidations like Fortune and Triumph Banks.

This concerted effort has significantly enhanced the debt recovery rate, enabling NDIC to declare full liquidation dividends to uninsured depositors of over 20 deposit money banks.

Furthermore, NDIC has embraced digital remote payment strategies, streamlining electronic funds transfers to verified depositors’ alternate bank accounts.

The introduction of the ‘Deposit Tracer’ initiative in partnership with mobile operators aims to address apathy among depositors with small balances, providing accessible avenues for claiming funds trapped in closed banks.

The initiatives underscore NDIC’s proactive stance in safeguarding depositors’ interests and ensuring financial stability in Nigeria’s banking sector.

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Banking Sector

85.51 Million Nigerian Bank Customers Face Withdrawal Freeze Over NIN, BVN Deadline

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First Bank

As the March 1 deadline looms, an estimated 85.51 million Nigerian bank customers are facing the possibility of frozen accounts due to their failure to link their National Identification Numbers (NINs) and/or Bank Verification Numbers (BVNs) to their accounts.

Recent findings reveal the potential scale of the impending banking crisis.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) indicates that Nigeria had approximately 146 million active individual bank customers as of December 2022.

However, by January 26, 2024, only 60.49 million BVNs were recorded on the NIBSS portal, leaving a significant portion unlinked.

Meanwhile, about 104 million NINs had been issued by December 2023, highlighting the disparity between NIN issuance and BVN linkage.

The Central Bank of Nigeria (CBN) had earlier issued directives to banks, mandating them to restrict transactions on accounts lacking linked NINs and BVNs, with effect from March 1, 2024.

Any accounts found non-compliant risk being designated as ‘Post no Debit,’ rendering them unable to process further transactions.

Responding to the impending crisis, the Director-General of the National Identification Management Commission (NIMC), Abisoye Coker-Odusote, emphasized the need for the revalidation of Front-End Partners (FEPs) to ensure the integrity of the identity database.

She underscored the importance of NIN registration and urged collaboration with various stakeholders to expedite the process.

The Executive Vice Chairman/CEO of the Nigerian Communications Commission (NCC), Dr. Aminu Maida, reiterated the significance of linking NINs to SIM cards to enhance national security.

Telecom subscribers were urged to comply with the NIN-SIM linkage directive to avoid service disruptions.

Meanwhile, financial service providers like Opay have issued reminders of the impending restrictions, urging customers to comply with the linkage requirements.

Amidst concerns, some customers contemplate transferring funds to compliant accounts to avoid potential financial setbacks.

As the deadline approaches, stakeholders are intensifying efforts to mitigate the impact of the impending banking crisis on millions of Nigerians.

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